NEW DELHI, Jan 24: The country’s economy is expected to improve in the coming six months, but private sector investments will be a concern due to sluggish capacity utilisation and pressure on profit margins, according to an Assocham Bizcon Survey.
Nearly 63 per cent of the poll respondents felt “the state of economy would be better in the coming six months”.
However, it found that lack of investment appetite in the private sector in the backdrop of lower capacity utilisation, excess supply and continuous pressure on profitability are the key areas of concern for the next few quarters.
In terms of the domestic investment, 58.3 per cent respondents felt there has been no change in the investment plans at the level of individual firms.
The sentiment seems to remain muted, going forward with 62.5 per cent respondents of the view that January to March 2016 quarter would not see much change in the investment levels.
“Thus there seems to be a continuing lack of appetite for new investment in the private sector,” the survey noted.
Assocham Secretary General D S Rawat shared the concerns brought out by the respondents in terms of pressure on profitability and lack of investment.
“Global deflationary situation creeping into India in several sectors is hitting investor sentiment. The consumer confidence can return only if there are more job opportunities through higher investment into productive areas of the economy like construction, infrastructure and manufacturing.
“The lead has to be taken by the government which has an onerous task before itself along financial sector regulators like RBI and SEBI to ensure investor confidence in the markets which can then feed the investment climate,” Rawat said.
The respondents seem to be highly optimistic with regards to their firm’s future performance as 70.8 per cent of them feel that they will be in a better position in the coming six months.
As many as 41.7 per cent of respondents felt that there is a decline in the sales volume during October to December 2015 while expecting better sales volume during January to March 2016 and 45.8 per cent expect that their sales volume will increase in future.
In terms of the future capacity utilisation, 66.7 per cent said the industry will be engaged at higher levels.
Besides, 54.2 per cent said there was no change in the cost of credit during October to December 2015.
“This is slightly surprising considering the fact that the monetary authority has reduced the policy rates. The possible explanation to this could be that the benefit of the rate cuts is not being passed onto the industry appropriately,” Assocham said. (PTI)
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